perspectives november 2009
macro Analysis Where will interest rates go in 2010? Asset Allocation “The trend is your friend” Product Focus Launching of Natixis Obli Opportunités 12 Mois
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Macroeconomic Analysis
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Asset Allocation Market Data
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Product Focus
Natixis Asset Management Limited Liability Company Share Capital 50 434 604,76 € RCS Number 329 450 738 Paris Regulated by AMF under n°GP 90-009 Registered Office: 21 quai d’Austerlitz 75 634 Paris, Cedex 13 - Tel. +33 1 78 40 80 00 www.am.natixis.com Natixis Multimanager Subsidiary of Natixis Asset Management A French simplified joint-stock company Share Capital of 7 536 452 euros - RCS Number 438 284 192 Paris Regulated by AMF under n°GP 01-054 Registered Office: 21 quai d’Austerlitz 75 634 Paris, Cedex 13 - Tel. +33 1 78 40 32 00 www.multimanager.natixis.com
11 News
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Contacts Prospectus and sales documents required for subscription are available on demand: n Natixis Global Associates (Operations): n or CACEIS Luxembourg (Prime Transfer Agent): n or Natixis Asset Management (Clients servicing): Cover picture: © Carlos Neto / Shutterstock.
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Perspectives is a Natixis Asset Management's publication - Natixis Asset Management - Communications Department - Business Development - communication-nam@am.natixis.fr
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Publishing Director: F. Lenoir Editorial Committee: T. Benoist, F. Delorme, S. de Quelen, K. Massicot, Ph. Le Mée, C. Michel, R. Monclar, F. Nicolas, C. Point, M-L. Rouy, B. Thiery, Ph. Waechter Coordination - Writing: N. Clémot Head of design: F. Dupertuys Contributors: R. Cyrille, D. Levadoux
Editorial The issue of interest rates lies at the centre of all doubts over the signs of a recovery in activity and of certain fears on the part of investors about inflation.
Philippe zaouati
Head of Business Development
According to Philippe Waechter, Chief Economist, the relatively stable rates in place since summer 2009 are in step with the continuing accommodative bias of monetary policy and reflect both the commitment of central banks to keep interest rates low for the foreseeable future and their reluctance to make macroeconomic adjustments that would fuel inflation. Nonetheless, Philippe Waechter believes that the exit strategies for the crisis that will be implemented in 2010 risk generating market volatility. The statements made by central bankers will thus be key in shaping the expectations of economic players [Macroeconomic Analysis page 2]. According to Franck Nicolas, Head of Global Asset Allocation and ALM, investors will therefore have to monitor very closely any change in bias. Vigilance will be required in timing an exit from fixed-income investments. However, in the short term, Franck Nicolas has identified an attractive carry on long-term bonds, as these are offering a far better return than money market instruments, which have been penalized by an Eonia rate that is lower than policy rates [Asset Allocation page 4]. In order to take advantage of this complex configuration, Natixis Asset Management is developing its short-term fixed-income product range and is launching Natixis Obli Opportunités 12 Mois, a bond investment that aims to benefit from all configurations on the fixed-income markets over a one-year horizon. The investment team has implemented an opportunistic strategy based on a double allocation: within the dynamic compartment (between bonds and money-market securities) and between the dynamic compartment and the carry portion, in order to react to all scenarios associated with movements in interest rates and credit spreads [Product Focus page 9]. With the aim of responding to its clients’ questions on interest rates, Natixis Asset Management devoted its MatiNAM held on 3 November to the issue of “What is the best investment strategy to adopt over a long period of low interest rates?”. In addition, Natixis Asset Management is offering a selection of short-term bond funds giving investors the opportunity to benefit from the potential for superior performance compared to money market instruments [Product News page 11]. Enjoy reading it,
www.am.natixis.com
November 2009
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Macro Analysis Where will interest rates go in 2010?
Philippe Waechter Chief Economist
A glance at the bond market shows US and euro zone interest rates have changed little since the spring. Short-term bond yields are consistent with a continuation of current accommodative monetary policies and long yields are pricing in no specific inflation premium. In the UK, though, the configuration is slightly different: long-term yields are stable but the shorter maturities (2-year) have been impacted by questions surrounding monetary policy.
The Context Interest rates have been relatively stable since summer 2009. This reflects both the commitment by central banks to keep rates low over the medium term and their refusal to adopt a macro-economic adjustment that would mean more inflation.
The Key Point Improving economic growth will drive a return to a more “normal” situation. Fiscal and monetary authorities have taken on risks originated by the markets and this has led to a rise in public sector debt and a ballooning of central bank balance sheets. Exit strategies will aim to restore more balanced behavior. This will, however, take time.
The Challenge The risk posed by these exit strategies is that of greater volatility. Future policy announcements will affect the expectations of economic actors and investors and impact the interest rate curve.
n A stable configuration…
wonders whether it should make one last cut to policy rates.
This relatively stable configuration should remain in place for a while yet, thanks to the commitments made by central banks:
n…but doubts could creep in
n To keep policy rates very low for the medium term. The Bank of Sweden, for instance, has said it intends to keep its low policy rate (0.25%) until at least autumn 2010. n Not to consider that the post-crisis macro-economic adjustment might be helped by a consistently higher inflation rate. Because of this important commitment, inflation expectations discounted in the various interest rate structures are generally limited. The two indicators followed in the USA and euro zone show identical profiles, with inflation breakevens on 10-year bonds at relatively low levels (lower than in the previous cycle). The same is true of 5-year inflationary expectations 5 years forward. Both indicators therefore suggest there are no destabilizing expectations for inflationary trends. Risks of deflation were clearly being factored in early on in the year, which explains the sharp plunge by US long yields at that time [see chart]. n Taken together, these two commitments explain the steep slope of the yield curve between its 2-year and 10-year segments. The commitment to keep rates very low is dragging down 2-year yields and at the same time reflects a broadly normal outlook for inflation discounted in the long end of the curve. The explanation of this mechanism throws some light on the current downward drift by UK 2-year yields, as the Bank of England
These different factors suggest interest rates will stay relatively stable over coming months. However, concerns in several areas could counter or invalidate this scenario, areas. n Concerns in the continued commitment of central banks to keeping rates very low for the medium term The situation could change if growth revives more strongly than anticipated. However, in light of the slump in activity seen to date, the central bank reaction functions(1) seem to rule out any immediate change of direction, even if there is a sustained recovery. That said, central bankers are clearly getting more nervous about the upturn. A time may come when, to avoid excessively volatile expectations among economic participants, central banks may intervene sooner than is generally expected. n Concerns in the implementation of crisis exit strategies During the financial crisis, central banks’ interventions swelled their balance sheets to unprecedented levels. Liquidity injections were successful in first stabilizing and then reinforcing the banking and financial systems. However, once the situation improves, it becomes necessary to mop up this liquidity to limit the risk of inflation as productive capacity starts to come under pressure. Liquidity can tend to exacerbate such pressures by leading to excessive lending. To avoid this problem, central banks will have to adopt exit strategies. Different monetary authorities applied very different methods
(1) The central bank reaction functions use statistical methods to forecast policy intervention rates based on the output gap and how far inflation deviates from the central bank’s implicit or explicit target.
2 November 2009
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when the crisis was at its height and the size of their balance sheets and the methods and scale of their asset purchases are also consequently very different. Any return to a more normal state of affairs could therefore tend to boost market volatility somewhat, something that central bankers are keen to avoid. This is why Ben Bernanke and Jean-Claude Trichet have already begun to talk at length about these operations, even though neither is setting a timetable. n Concerns in the deficits needed to implement these government exit strategies One result of the crisis has been a spectacular ballooning of public sector deficits and debt. The IMF estimates that by 2014 the national debt/GDP ratio of the leading industrialized countries could reach 110%, compared to just under 40% at the start of the 1970s. To restore their room for maneuver, governments will have to adopt highly proactive strategies over a relatively long timescale, without which they will have no scope for intervention in the event of a further shock to the economy.
While growth seems to be a necessary condition to pay down these excesses, it is still not sufficient at the moment. Real spending and income strategies need to be drawn up and made public to limit the uncertainty that will affect all participants in the economy. This will be a real revolution, driving governments to commit to strategies defined in advance. For 2010, if the situation is perceived to have improved, there will unquestionably be a need to clearly define policy direction so that all players in the economy can plan for a longer horizon without being plagued by uncertainty as to how governments are going to carry out their adjustments. Besides these internal dynamics, 2010 will also bring a new situation. The recovery is being made in Asia, even if other emerging markets are also showing strong growth trends. This will have a heavy influence on interest rates in industrialized countries as it will raise two major issues: • I f the economic situation is better in Asia, central banks will use monetary policy to steer their economies. This is the scenario cited by the Bank of Australia when raising its benchmark
interest rate on October 6. It is easy to see Korea following suit now that its recovery is confirmed. However, this shift in strategy will inevitably have an impact on industrialized countries. • I f, in an emerging region such as Asia, a country like China looks to refocus growth on its domestic market, what will it then do about the foreign finance that it had previously been providing (notably to the USA)? Also, as it reallocates resources in this way, how will it use and manage its foreign exchange reserves (heavily invested in US Treasuries)?
Conclusion
All these issues will come to the fore over coming months, though for the moment they throw up more questions than answers. If the economy recovers its strength in 2010, this will undoubtedly mean major adjustments and greater volatility on fixedincome markets. Written on 29/10/2009
US, Euro zone and UK interest rates
Source: Factset - Calculation: Natixis Asset Management
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November 2009
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Asset Allocation Asset allocation: “the trend is your friend” “Run your gains and cut your losses” - this essential trading rule seems to be particularly appropriate for describing the rational attitude that it is sensible to adopt under current market conditions. For the tenth month in a row, even if a phase of consolidation could be on the way, riskier assets have continued on an uptrend, driven by the same factor since the lows seen in March: the economic recovery.
Franck nicolas Head of Global Asset Allocation & ALM
Our recommendations by asset class Fixed Income
Risk categories
Risk subcategories
Tactical allocation* Sept. 09(1) Oct. 09(2)
Fixed income equities
= +
fixed income United States
Euro issuers Equities
= +
While Natixis Asset Management had already detected a low risk segment of fixed income products in the absence of monetary tightening in the US or euro-zone, potential in this asset class remains relatively limited. However, steepening of the yield curve has opened up an attractive carry on long-term bonds. This offers a far better return than money market instruments, which have been penalized by an Eonia rate that is lower than policy rates. The bond market seems to have peaked, at best; or to have become risky. In any event, if we believe that the recovery will continue, investors will have to be careful about their exit timing for this asset class once the central bankers start to take a less accommodative stance, so as to avoid posting significant losses. It is therefore likely that the time has come to reduce the fixed income allocation. For its global portfolios, Natixis Asset Management favors equities over corporate bonds, which also seem to have exhausted most of their potential.
-
-
Euro UK Emerging countries Japan
= -
= -
=
=
=
=
Corporate
+
+
United States Euro
+ +
+ +
UK
+
+
Equities Natixis Asset Management’s investment strategy is to reduce its equity allocation, while remaining overweight in this asset class. Corporate earnings are set to improve and could even be surprisingly buoyant. The progress suggested by leading indicators, stock levels and new orders should gradually feed through to private sector results. This could create further upward movement in the markets. When this movement peters out, we could see a sector rotation favoring sectors that have been lagging, i.e. defensive sectors.
Japan
=
=
CURRENCIES
Dollar
=
=
(against the euro)
Yen
=
=
Pound
=
=
=
=
=
=
COMMODITIES Oil Gold Scale from -- to ++
(1) Investment committee on 02/09/2009. (2) Investment committee on 24/09/2009. * weighting gap v.s. strategic allocation of an investor.
In geographical terms, the dollar’s weakness will start to weigh on European exports. Although the Strategy Committee had prioritized the eurozone and Asia, it does not rule out returning to US equities if the weak dollar continues to boost US foreign trade. What’s more, if the exchange rate returns to the highs of 2008 (it would only have to rise by 6.5 % for one euro to be worth USD 1.60), this would likely represent a strong resistance level, and dollar-denominated investments would cease to have a penalizing effect for a time.
Currencies As explained above, the dollar is gradually weakening against all the world’s currencies. Currencies linked to commodities have remained very strong in this phase of global recovery. The Australian dollar, in particular, which Natixis Asset Management continues to include in its asset allocation, remains highly robust, and will probably strengthen further.
Commodities Agricultural commodities are showing strong growth, but have proved disappointing, as they could have taken over from oil at the beginning of the autumn. At this stage of the cycle, when there should be more variation in the performance of the different asset classes, commodities offer an excellent avenue for diversification. In the medium term, it will be necessary to monitor their progress to ensure that this does not become too harmful to the real economy, but we have not reached that point yet.
Written on 26/10/2009
4 November 2009
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Market Data As of 30/09/2009
France CAC 40 CAC Mid 100 IT CAC 20 SBF 120 SBF 250
Europe MSCI Europe Euro Stoxx 50 DAX Footsie
United-States Dow Jones S&P 500 Nasdaq Brent Crude Future
Asia Nikke誰 Hong Kong Singapore Shangha誰
World MSCI World
Value 3 795.41 6 179.50 3 388.14 2 775.79 2 712.55
1 year -5.87% 5.02% 1.18% -4.67% -4.56%
Value 84.28 2 872.63 5 675.16 5 133.90
1 year -5.82% -5.45% -2.67% 4.72%
Value 9 712.28 1 057.08 2 122.42 69.07
2009
-14.72% -9.37% 1.93% -29.64%
10.66% 17.03% 34.58% 51.50%
1 year
2009
-10.01% 16.31% 13.30% 45.76%
14.38% 45.65% 51.72% 74.46%
Value 1 126.98
2009 21.39% 17.18% 17.98% 15.78%
1 year
Value 10 133.23 20 955.25 2 672.57 193.50
2009 17.94% 39.74% 16.39% 20.11% 20.49%
1 year -4.69%
2009 22.47%
Money Market Rate Eonia Euribor 3 months Euribor 6 months Euribor 1 year Fed Funds
0.533% 0.753% 1.016% 1.236% 0.070%
1 year -3.640 -4.524 -4.361 -4.259 -1.960
2009 -1.819 -2.139 -1.955 -1.813 -0.020
Fixed Income Rate 5 years French Treasury Bond 5 years USTN 10 years French Treasury Bond 10 years USTN 30 years French Treasury Bond 30 years USTN
2.518% 2.308% 3.536% 3.302% 4.065% 4.044%
1 year -1.547 -0.678 -0.809 -0.539 -0.666 -0.276
2009 -0.215 0.756 0.122 1.088 0.340 1.376
Currencies Value Euro/Dollar Euro/Yen (100) Euro/Sterling Dollar/Yen
1.462 130.873 0.914 89.535
1 year
2009
4.06% -12.24% 15.98% -15.66%
5.15% 3.86% -5.47% -1.23%
The monthly Index The dollar/yuan exchange rate The dollar/yuan exchange rate has gone through three phases since the early 2000s. A first phase, starting in 1995, of stability of the dollar/yuan cross. The objective at that time was to stabilise the trend in Chinese domestic prices. A second phase, characterised by the appreciation of the yuan, starting from 21 July 2005. The Chinese had accepted the revaluation of their currency but it had led to a huge rise in speculative capital inflows and a loss of control of the monetary parameters. The third and final phase, from summer 2008, in which the exchange rate has again stabilised. The Chinese wanted to take more control of their monetary parameters in this crisis period, by reducing the speculative appeal of their strategy. Speculative capital inflows then reduced sharply. This stability may only be temporary. However, if China wishes to have a transferable currency, it will have to further develop its financial markets. That will take time. Source: Factset - Calculation: Natixis Asset Management
www.am.natixis.com
November 2009
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Overwiew of our international Product range Sub funds of the NIF (Lux) I SICAV managed by Natixis AM These 7 sub funds of the Natixis International Funds (lux) I SICAV reflect the key expertise of Natixis Asset Management
Natixis Euro Aggregate Plus Fund ic
e-Mér
elanné
eD Isabell
Benefit from a broad range of fixed income investment opportunities
• Investment universe: Mainly Euro denominated government or private issuers rated Investment / Diversifying fixed income assets • Benchmark: Barclays Capital Euro Aggregate • Minimum recommended investment period: 3 years
I, A I, D R, A R, D
EUR EUR EUR EUR
LU0161120547 LU0391146155 LU0161121271 LU0390502184
Natixis Global Inflation Fund Get the most out of diversification in inflationindexed bonds in a global universe
tard
Po Sophie
• Investment universe: International inflation-linked bonds • Benchmark: Barclays World Government Inflation linked all maturities Index hedged in euro • Minimum recommended investment period: 2 years • Risk Indicator: Target tracking-error ex ante of 2%(maximum)
H-I, A H-I, D I, A I, D R, A R, D
USD USD EUR EUR EUR EUR
LU0390502267 LU0390502341 LU0255251166 LU0255251596 LU0255251679 LU0255251752
Natixis Impact Euro Corporate Bond Fund rbier
e Ba hristin
C
Benefiting from the SRI expertise of Natixis Asset Management through a socially responsible portfolio of investment grade corporate bonds
• Investment universe: Mainly Euro-denominated investment grade debt securities issued by OECD as well as cash, money market instruments or other securities • Benchmark: Barclays Euro Aggregate Corporate Index • Minimum recommended investment period: 3 years
See the full prospectus which is the only legally binding document.
6 November 2009
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I, A I, D R, A R, D
EUR EUR EUR EUR
LU0155376477 LU0391146072 LU0155380156 LU0390502770
Natixis Emerging Europe Fund de
ndra u Belo
ie
Matth
éret
ois Th
Franç
Get the most out of the growth in the emerging European zone as part of a conviction management strategy
• Investment universe: Emerging Europe Equities • Benchmark: None (MSCI Emerging Europe Index: indicative only) • Minimum recommended investment period: 5 years • Risk Indicator: Target tracking-error ex ante between 6 and 10
I, A I, A I, D R, A R, A R, D
EUR USD USD EUR USD USD
LU0147917792 LU0095830922 LU0095831060 LU0147918923 LU0084288595 LU0084288678
Natixis Europe Smaller Companies Fund Benefiting from the potential of European Small & Midcaps within the scope of a conviction-based strategy
pers
Cuy Thierry
• I nvestment universe: European Small and Mid Equities •B enchmark: None (MSCI Europe Small Caps NDR: indicative only) • Minimum recommended investment period: 5 years • Risk Indicator: Target tracking-error ex ante between 4 and 7 (indicative)
I, A I, D R, A R, D
EUR EUR EUR EUR
LU0095827381 LU0095828272 LU0064070138 LU0064070211
Natixis Euro Value Fund Tapping the potential of Eurozone value equities within the scope of a conviction-based strategy
re
Lefèv Olivier
• Investment universe: Eurozone Equities • Benchmark: None (MSCI EMU NDR: indicative only) • Minimum recommended investment period: 5 years
I, A I, D R, A R, D
EUR EUR EUR EUR
LU0389329003 LU0389329185 LU0389329342 LU0389329425
Natixis Impact Europe Equities Fund Active and responsible investing to maximise SRI value added
breton
ine Le Christ
• Investment universe: European equities • Benchmark: None (MSCI Europe: indicative only) • Minimum recommended investment period: 3 years
I, C I, D R, C R, D
EUR EUR EUR EUR
LU0095828512 LU0095828785 LU0066549592 LU0066549832
See the full prospectus which is the only legally binding document.
www.am.natixis.com
November 2009
7
Overwiew of our international Product range Funds of Natixis Asset Management available through Private Placement 25 complementary funds covering all asset classes are available through Private Placement. This quarterly reviewed list of funds aims to provide Natixis Global Associates' teams* with the most innovative products of Natixis Asset Management and to offer a wider range of expertise.
Fixed income
Money Market
Asset class Fund name
Share and ISIN code
Natixis Cash Première
C: FR0010157834
Natixis Cash A1P1
C: FR0010322438
Natixis Impact Cash
C: FR0010008003
Natixis Cash Eonia
I: FR0010298943
Natixis Tréso Euribor 3 Mois
FR0000293714
Natixis Souverains Euro 1-3
I: FR0010208421
Natixis Souverains Euro 3-5
FR0010036400
Natixis Souverains Euro 5-7
FR0010201699
Natixis Souverains Euro 7-10
FR0000449092
Natixis Souverains Euro
RC: FR0000003196
Natixis Inflation Euro
I: FR0007475413
R: FR0010170944
Natixis Crédit Euro
I: FR0010171108
R: FR0010690966
I: FR0010658963
R: FR0010660142
Equities
Natixis Convertibles Euro
BalanAltern. Absolute return ced
R: FR0007084926
Natixis Convertibles Europe
C: FR0010171678
Natixis Actions Europe Dividende
IC: FR0010582478
RC: FR0010573782
Natixis Impact Life Quality
C: FR0010410274
E: FR0010458539
Natixis Actions US Value
I: FR0010256412
R: FR0010236893
Natixis Actions US Growth
I: FR0010256404
R: FR0010236877
Natixis Actions Europe Convictions
C: FR0010346429
Sonic Monde
I: FR0010555797
RC: FR0000993446
Natixis Absolute Quant Bond 18 M
I: FR0010232348
R: FR0010249219
IC: FR0010654921
RC: FR0010657924
IC: LU0161071237
IC: LU0161073951
Natixis Absolute Swap Arbitrage Natixis Constellation European Event Alpha Hedge +
RC: FR0010058453
Réactis Emerging
I: FR0010634345
RC: FR0010626218
These funds are authorized for sale in France and possibly in other country(ies) where their sale is not contrary to local legislation. Please refer to legal information of this material. * Natixis Global Associates is a global distribution platform which brings their investment expertise of the affilliated investment managers to clients outside France.
8 November 2009
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Interview with...
Product Focus Natixis Obli Opportunités 12 Mois Natixis Asset Management is developing its short-term fixed-income product range and launches Natixis Obli Opportunités 12 Mois.
n Benefit from a fixed-income investment over a short recommended horizon
Head of Interest Rate and Foreign Exchange
Why invest in short-term fixed-income market? Considering the current market conditions (historically low interest rate, falling moneymarket investment returns, etc.), many investors are looking for investment alternatives. We wanted to put forward a fund which could: • capture the added-value sources in interest rate markets over a 12-month horizon, • minimize risks of NAV drawback over a year. After several historical and quantitative analyses, we recommended 3 asset classes over a minimum investment period of one year: money-market, short-term sovereign bonds and covered bonds in a carry strategy.
Why this investment strategy? We have implemented an opportunistic allocation in order to react appropriately the evolutions of interest-rate markets and credit spreads. That way we can benefit from both: • the advantages of an active management of short-term interest rates (1 to 3 years) • and the ones of a carry strategy in an openended fund in order to take profit from credit spreads from covered bonds.
Written on 20/10/2009
Natixis Obli Opportunités 12 Mois is a fund which aims to take profit from all configurations in fixed-income markets, over a one-year horizon. By investing in bonds or money-market securities of good quality*, it implements the main interest rate strategies: carry, modified duration, curve and relative value. The objective of Natixis Obli Opportunités 12 Mois (I share) is to outperform capitalized EONIA by 75 bps over a recommended investment period of 12 months.
n An investment process based on a double allocation The portfolio of Natixis Obli Opportunités 12 Mois comprises two distinct compartments: • A dynamic compartment: this portion is invested in euro-denominated bonds* and money-market securities* issued by OECD and EEA member states, or by private issuers guaranteed by these member states. It involves an active management of the one-to-three-year interest rate based on various sources of added value: active management of the modified duration, dynamic allocation in the yield curve and selection of countries and securities. • A carry compartment: this compartment comprises covered bonds* and guaranteed debts of eurozone states* and enables investors to take advantage of attractive credit spreads.
Credit spread evolution Interest rate evolution
Olivier de Larouzière
Widening of credit spreads
Narrowing of credit spreads
Increase of Overweight Dynamic compartment Overweight Carry compartment interest rate Overweight Money-Market Decrease of Overweight Dynamic compartment Overweight Carry compartment interest rate Overweight Bonds Allocation between Dynamic compartment / Carry compartment Allocation between Money-Market / Bonds in the Dynamic compartment
* Rated as follows: - for securities of the money-market type (with maturity of less than 1 year): between A1+ and A1 according to S&P, P1 according to Moody's - for securities of the bond type (with maturity of more than 1 year): between AAA and AA- according to S&P, between Aaa and Aa3 according to Moody's (except supranational issuers or OECD member states)
www.am.natixis.com
November 2009
9
In order to take advantage of the different conditions in the fixed-income market, the investment team has implemented an opportunistic strategy based on a double allocation: • in the dynamic compartment, an allocation between bonds and money-market securities; the modified duration of this portion may accordingly range from 0, when the portion is monetarized, to 4, when the investment team decides a maximum exposure to interest rates; • between the dynamic compartment and the carry portion in order to react to all scenarios associated with evolutions in interest rates and credit spreads. When determining the allocation to be adopted, the investment team uses the recommendations of the Macroeconomic Research analysts and of the Sector Teams specialized in fixed-income markets and analyses by the Covered Bond Research team.
Covered bonds Covered bonds are bonds issued by banks and whose repayment is guaranteed by a pool of assets. They are an alternative way of financing to Senior or subordinated debt. This market currently represents over €700 billion. Unlike similar securities such as securitizations and ABSs, covered bonds benefit from: selection of assets fulfilling strict eligibility criteria, resulting in bettera quality assets; s pecific regulations and supervision by a designated entity (public or independent, depending on the country); ouble protection for investors (by the issuing credit institution and d a pool of assets) and priority access to repayment in the event of default.
FUND FEATURES I Share Management company
R Share Natixis Asset Management French SICAV
Legal form UCITS compliant
Yes
Inception date
16 may 1995*
Accounting currency ISIN / Allocation of income Maximum operating and management fees including taxes Maximum subscription fee Maximum redemption fee
EUR FR0010796391 / Accumulation
FR0007493226 / Accumulation
0.30%**
0.4784%**
not paid to the fund
None
1%
paid to the fund
None
None
not paid to the fund
None
None
paid to the fund
None
None
Performance fee including taxes
30% inc. taxes of the net outperformance 30% inc. taxes of the net outperformance relative to the capitalized Eonia Index +0.75% relative to the capitalized Eonia Index +0.55%
Minimum share fraction
One ten-thousandth
Minimum initial subscription
e 50,000
Initial net asset value
e 50,000
Net asset value calculation
e 4,573.47 Daily
Cut-off time
D 12.30 pm (CET)
* Change of investment strategy on September 14th, 2009. ** Basis: net asset.
10 November 2009
None
www.am.natixis.com
News Investment strategies: the rates issue
Products news What opportunities do short-term fixedincome markets offer in an environment of low money market rates? Despite nascent signs of recovery, central banks remain highly prudent about any rate rises. At the same time, despite a narrowing of spreads over recent months, risk premiums are still not fully back to normal. This environment of low rates and still attractive spreads is creating some interesting opportunities in fixed-income markets. Natixis Asset Management therefore proposes a selection of short-term fixed-income funds that offer investors the benefit of potentially outperforming short-term rates in exchange for a longer investment horizon than with money-market funds.
The MatiNAM meeting of November 3, held by Natixis Asset Management for its clients, brought together around a hundred participants to discuss “Investment strategies for a world of lastingly low short rates?” After an introduction by Christophe Point, Head of Sales, Philippe Waechter, Chief Economist spoke on the theme, “2010 - Which growth profile for which monetary policy?” Anne Faivre, fixed-income Strategist, then presented the opportunities to be found on the fixed-income market in the current low-interest rate context, before giving way to Nathalie Pistre, Deputy Head of Fixed Income, head of SAMS and Head of quantitative and arbitrage investment, who set out a selection of Natixis Asset Management’s short-term fixed-income funds designed to respond to this issue. This selection is tailored especially for investors seeking to benefit from potential outperformance compared to money market investments. Brief overview this selection on the opposite page
n Money market/bond allocation Natixis Obli Opportunités 12 Mois Investment objective (I Share): Eonia +75 bp/12-month investment horizon Modified duration: between 0 and +4 A double allocation between active management (money market/fixed income allocation) and carry (notably covered bonds) strategies, while seeking to minimise risks of a fall in NAV on a 1 year horizon. Natixis Absolute Strategic Bond Investment objective (I Share): an average performance close to that of EEA Short-/medium-term sovereign bonds/9-month investment horizon. Sensitivity: between 0 and 2.5 A multi-strategy opportunist fund with allocation to all fixedincome asset classes. Insertion Emplois Sérénité Investment objective (I Share): to outperform the Eonia over an 18-month investment horizon Sensitivity: between -3 and +5 A socially responsible solidarity fund with flexible allocation to money market and bond market assets.
n Quantitative investment management Natixis Absolute Quant Bond 18 M Investment objective (I Share): Eonia +100 bp/18-month investment horizon Sensitivity: between -4 and +4 Identification of market trends using a quantitative model allows the fund to take advantage of fluctuations in the yield curve. Natixis Absolute Swap Arbitrage Investment objective (I Share): Eonia +200 bp/24-month investment horizon Sensitivity: 0 The fund seeks arbitrage opportunities between 10 interest rate swap curves in OECD countries by applying a discretionary management approach based on quantitative screening.
Further information on: www.am.natixis.com
Solidarity! For the fourth year running Natixis Asset Management joins Finansol(1) in promoting National Socially Responsible Investment Week. From 4 to 11 November 2009, a number of events have been organized all over France to raise the profile of socially responsible investment, a type of investment that combines performance and solidarity. Natixis Asset Management, as a leader in socially responsible investment with 49 % of the market(2), has naturally joined Finansol in promoting this form of investment to the general public and the corporate sector. (1) F inansol is a professional association aiming to promote socially responsible investment and ethical finance. (2) Source: 2008 edition of Finansol’s socially responsible investment survey.
In brief Patrimonia 2009 Patrimonia, the annual conference for IFAs (Independent Financial Advisers), held on October 1st & 2nd at the Lyon Conference Center. Over the two days, several Natixis’ entities (including Natixis Asset Management) promoted their expertise dedicated to IFAs. The Third Party distribution sales team of Natixis Asset Management promoted the diversity and complementarity of the Natixis Global Asset Management multi-boutique model offering through a selection of products dedicated to the independent wealth management advisers: Natixis Asset Management products, but also those of its partner Dorval Finance and the flagship funds of the US and Asiatic affiliates. Natixis Asset Management at the Second French Pensions Forum Organized by the Financial Times, the Second French Pensions Forum, held on 22 October, aimed to tackle the issues relating to pension fund management, notably in terms of SRI and asset allocation at times of crisis. Philippe Waechter, Natixis AM’s Chief Economist, gave a presentation at the event: “Financing the recovery and pensions: mission impossible?”. In addition, Philippe Zaouati, Head of Business Development at Natixis Asset Management, participated in a round table discussion entitled “Has the crisis contributed to investors increasing the SRI component of their investments?”. [Further information: www.ftglobalevents.com]
www.am.natixis.com
November 2009
11
The Wave - RenĂŠ van Zuuk Architekten B.V. Photography: Luc Boegly/Artedia.
solid or flexible?
Balancing perspectives to create value At Natixis Asset Management, we understand that being a strong asset manager makes us more responsive. We continually strive to meet our clients’ needs. With around e294 billion in assets under management as of June 30, 2009 and some 600 employees based in Paris, Natixis Asset Management offers institutional investors, large companies, distributors and banking networks a wide range of products and investment solutions across all asset classes. European expert of Natixis Global Asset Management www.am.natixis.com
The Wave, Almere, The Netherlands